Plans to privatise Russia’s power sector have been shelved, despite the fact that liberalisation and the reform programme continue. With the sell off of UES generation assets set to begin this year, the process has now been suspended, possibly until next year. Although more than 45% of UES is in private hands, the sell off issue will now be revisited only after new generating companies have been up and running for a year or two. Concerns of controversial price increases and their potential economic impact are thought to be behind the decision to delay the sell off.

Meanwhile, the state is proceeding with its programme of assuming control of the national transmission sand distribution network by unbundling the distribution assets from generation across the 52 regional energos. According to the reform plan, the main grids of regional energy companies should be consolidated into seven interregional main grid companies.

The embryonic wholesale power market is to be expanded beyond the 15% limitation currently in force. Large, regional generation companies are also planned with the UES board recently approving the final four of 10. Six of the new generation companies had been expected to be on the block as part of the reform process with hydro and nuclear generation to remain in state hands until at least 2008.